Lecture 3 - Information Systems Strategy (Recent IT Trends)

Learning and Application of Theory:

MIT 90 Framework

Figure 1: MIT 90 Framework (Vanderzee, 2008)

MIT 90 Framework that originally found by Mortan (1991) which consist of Evolutionary and Revolutionary levels that reflects different stages of Information systems in an organization. Further this framework invoke by Venkatrama & Henderson (1993) as illustrated in Figure 1 that consist of five levels in business transformation. This basically means the more advanced systems placed in an organization incur lot of cost, by the time it benefits the organization in the other hand. Integration of new information systems need to be done in structured way due to lower level information systems contributes to the high level information systems to operate basically means organizations need to operate basic level systems functionalities before emerging to an advanced systems. Stage One and Two belongs to Evolutionary Level where the cost of business transformation and Benefits its generates considerably low compare to the stage Three, Four and Five in Revolutionary level. Lets analyze in depth of each transformation stage.

 

1st: Localized Exploitation/Island of Automation

As noted by Vanderzee (2008) Localized exploitation focus on to improve business functions efficiency and accuracy by minimizing the time and cost within each departments as (HR Department, Marketing Department, Finance Department and etc. where Information Systems functions operates isolate in separate domains. The drawbacks of having isolated systems can be define as lack of integration and data redundancy. These drawbacks made new phenomenal in peoples mind where it highlights the communication/integration of systems since just automating the current process from manual procedures wont benefit the company from its problems as expected.

2nd: Internal Integration

Vanderzee (2008) describes that Internal Integration interconnects all department activities to one single direction that map with organizational goals to achieve a particular task collaboratively by eliminating most of the redundant activates which results them more onetime operations or reduction of throughput time. As an example Transaction Processing System (TPS) along with a Database been used to increase interdependence between Sales and Marketing Departments to Production Department.        

3rd: Business Process Redesign (BPR)  

As per Vanderzee (2008) Business Process Redesign completely altering business processors in a way to compatible with IT infrastructures as a result of fundamental rethink of the most effective way to conduct business. These system processors are developed to unlock IT capabilities and aiming at a high level of alignment between organization, people and technology. This phase brings new concepts and major changes to the organization and re-engineering the entire business operations. As an example ERP system been use in this stage to inter connect internal and external management information across an entire organization as well as to facilitate the flow of information between all business functions inside the organization and manage the connections to outside stakeholders. 

4th: Business Network Redesign

As said by Vanderzee (2012) Business Network Redesign angle the redesign system phase to allow collaboration with other Business networks in the side of suppliers (Disintermediation) and customers and enable them to do business transactions smoothly without any interruption. Proper Information Technology platform requires to have less noise end to end wide range communication for parallel activities to handle by eliminating geographic and timebase boundaries. In this phase organization needed to handle risk of failures when adopting strategies and needed to place proper mechanisms to identify alternative paths to get the work done in most efficient way. As an example ERP II where it allows both employees and partners (such as suppliers and customers) in real time access to the systems over web base software or from a web browser.

Figure 2: Supply Chain Integration (Wikimedia, 2012) 

Li (2007) noted that supply chain partners can be categorized in to two groups as Vertical and Horizontal partners. As illustrated in Figure 2 In Vertical supply chain usually each member (companies) of the supply chain provides a different product or service from a united common owner through out the supply chain to satisfies a common need of an end consumer. Where as Horizontal supply chain means a company taken over by, or merged with, another firm which is in the same industry and in the same stage of production as the merged firm. This results due to ownership company strategy that seeks to sell a type of product or service in numerous markets in the intention to increase the share of the market. Beside the above two concepts as written by Jeyarathnam (2008) Vertical Integration may be either Backward or Forward integration. Backward integration done in order to have a stable supply of inputs and reduce ordering time of materials in the production process where as Forward integration done from the point of final product to until the product reach its end customers by intention to provide value addition to the customer through Time to Market concept.
             

5th: Business Scope Redefinition      

As pointed out by Vanderzee (2012) Business Scope Redefinition relates to the possibility of expanding or shifting the business mission and scope to an new phenomenal. In this stage company seeking for new opportunities in locally and globally to expand its businesses activities from local to regional and regional to national as well as from international to global. As an example Supply chain management (SCM) system been used to active management of supply chain activities such as synchronizing supply with demand and measuring performance globally to maximize customer value and achieve a sustainable competitive advantage over industrial rivals.  

Application:

As an example lets consider a scenario of an apparel garment factory. The garment wants to move from manual work management process to an automated system since they face lot of inefficiencies in the current process. MIT 90 framework gives an proper idea where the company currently states in the hierarchy of information systems. Today most of the middle scale companies owns some kind of information system like a Transaction Processing System (TPS) along with a database that resides in the evolutionary level in MIT 90 model to manage there day to day operations properly. If there aren't any information system been placed that means the company cannot exist until the next decade since they unable to achieve economies of scale in long run. In today's context many organizations moving from evolutionary level to revolutionary level since they need to manage the outer bound basically the interaction with their stakeholders and suppliers never like before to cater current market trends. Due to that fact the apparel garment factory may deploy MIS, DSS, ERP and SCM systems gradually to linkage the inner bound and outer bound of the organization operations in a well tuned manner in order add value to the product or service in each touch point. Ultimately the apparel garment factory able to achieve a strong economies of scale by well positioning them self in the market well head their competitor.         

Reality of the Lecture:

Today many companies shining out in their own industry than their competitors. If we consider the history of those companies they started small and developed rapidly in a short time period. Most of the previous industrial giants were failed to gain a competitive edge as they did before with the evaluation of information technology. The main reason for this was resistant to change from the current business processors since they thought it was the best way to get the things done. The companies who identified the importance of Information Technology transformed their business functions partially or fully to automated aspect. In evolutionary level the effect of SILO is high where the departments in the organization lack integration and proper communication due to isolated work procedures.

As a whole companies now moving from evolutionary to revolutionary level in the intention to unrevealed maximum market share that they can target to have a great economies of scale. The effect of SILO gradually eliminates in the revolution level due to the fact that common platforms been standardize across the departments and linking them with stakeholders and supplier systems in order to have well define collaborative commerce. In this stage companies need to consider cost and benefit variables since it align to business scope and strategies. Benefits always gain by taking a huge risk of failure and the benefit margin of information systems depends on cost of investment the company willing to pay.

Reference:

Morton, M. S. S. (1991). The Corporation of the 1990s: Information Technology and Organizational Transformation. [Online] USA: Oxford University Press. Available from: http://www.questia.com/read/96197370/information-technology-and-the-corporation-of-the .[Accessed: 7/11/2012]

Venkatraman, N. & Henderson, J. (2012). Strategic Alignment: A Model for Organizational Transformation via Information Technology. [Online] Massachusetts: Massachusetts Institute of Technology. Available from: http://www.google.lk/url?sa=t&rct=j&q=&esrc=s&source=web&cd=3&ved=0CCsQFjAC&url=http%3A%2F%2Fdspace.mit.edu%2Fbitstream%2Fhandle%2F1721.1%2F49184%2Fstrategicalignme90hend.pdf&ei=P7qfUKDYEIy0rAfzroGoAQ&usg=AFQjCNFykOrVG5kN0md7oMx1P1zZVL_srQ&sig2=OynqDocyKjpS6uH3BDq6Dw&cad=rja .[Accessed: 7/11/2012]

Vanderzee, H. T. M. (2008). Trends Leading Towards Business Transformation. [Online]. December 2008. Available from: http://be.atos.net/NR/rdonlyres/DC39FE5E-2189-434D-B81D-DCDA435336CB/0/View_dec_2008.pdf .[Accessed: 7th November 2012]

Wikimedia (2012). Supply Chain Integration. [Online]. Available from: http://upload.wikimedia.org/wikipedia/commons/thumb/f/fc/Integration_in_English.svg/500px-Integration_in_English.svg.png [Accessed: 7th November 2012]

Li, L. (2007). Supply Chain Management Concepts, Techniques and Practices: Enhancing Value through Collaboration. [Online] New Jersey: World Scientific Publishing Co. Available from: http://books.google.lk/books?id=cZKOw0BPYvQC&printsec=frontcover#v=onepage&q&f=false .[Accessed: 7/11/2012]

Jeyarathnam, M. (2008). Strategic Management. [Online] Mumbai: Himalaya Publishing House. Available from: http://site.ebrary.com/lib/staffordshire/docDetail.action?docID=10415735&p00=Backward+integration .[Accessed: 7/11/2012]